Do customer knowledge and customer trust in IDIC affect bank customer retention? Evidence from Indonesia

Purpose — The primary focus of this research was to examine the impact of customer knowledge and customer trust in Indonesia Deposit Insurance Corporation (IDIC) on the retention of bank customers in Indonesia. Method — The study employed a cross-sectional design and quantitative survey study. Questionnaires were distributed randomly to respondents via social media. 141 respondents from bank customers in Indonesia have been analyzed. Hypothesis testing is done by multiple linear regression analysis with structural equation modeling and SmartPLS as a statistical tool. Result — The results show that the average bank customer in Indonesia has sufficient knowledge about the role, function, task, and performance of IDIC. However, knowledge needs to be improved because some customers do not understand it well. The results provide empirical evidence that customer knowledge and customer trust in IDIC have positive influence on bank customer retention. Contribution — There is a new concept with the integration of two theories that will benefit future research. The findings contribute to addressing research gaps that have inconsistent results. The findings also contribute to improving customer knowledge and customer trust as a solution to the impact of the COVID-19 pandemic and the global financial crisis. This study supports the G20 in strengthening financial safety nets, where multilateral development banks are encouraged to strengthen their financing systems to face global economic challenges.


INTRODUCTION
Financial institutions have significant contribution to the growth and development of national economy (Galletta et al., 2021). As financial institutions, banks provide short-term deposit services and long-term investments in the forms of loans (Havidz & Setiawan, 2015). However, due to the Asian Financial Crisis in 1997, 16 private-national banks had to be liquidated which decreased customers' trust in banks (Dale, 2000;Trinugroho et al., 2012). To regain the trust, Indonesian government established Indonesia Deposit Insurance Corporation (IDIC) or Lembaga Penjamin Simpanan (LPS) in 2005 (Nizar & Mansur, 2023).
Unfortunately, the Global Financial Crisis (GFC) that occurred in 2008 once again caused the customers' trust to decline (Atahau & Cronje, 2020; Probohudono et al., 2013). The GFC brought major impacts on loans, currency depreciation, and a contraction in non-oil and gas exports (Achsanta et al., 2021). Indonesian government has taken all necessary measures to strengthen IDIC (Jameaba, 2018). Even more, customers massively withdrew their savings after the case of PT. Bank Century in 2008 came out (Angkinand & Wihlborg, 2010). In 2020, Indonesia experienced another global crisis, the impact of the COVID-19 pandemic. This crisis was more severe than 2008, but not as bad as 1998 (Cheema et al., 2022;Chen & Yeh, 2021). IDIC was appointed by the government to handle the case by protecting the customers' deposits at Bank Indonesia and to maintain the stability of the banking system (IDIC, 2023). IDIC was also established is to formulate, establish, and implement policies for failed banks that can bring both systemic and non-systemic impacts (Jameaba, 2018).
Initially, the amount guaranteed by IDIC reached IDR 2 billion from each deposit (IDIC, 2023). In August 2021 (Table 1), IDIC officially increased the amount to IDR 2,947 trillion, partial guarantees to IDR 617 trillion, and non-guaranteed deposit to IDR 3,562 trillion (Databoks, 2021). IDIC has been working to improve its performance and is committed to strengthening the financial safety. Databoks (2022b) regarded IDIC successful in liquidating 117 banks in Indonesia from 2006 to the end of 2021, including 116 Rural Credit Banks or Sharia Rural Banks, as well as 1 default commercial bank ( Table 2). IDIC returns customers' deposits that meet the eligibility criteria. There has been a total of IDR 1.7 trillion paid to 265,884 deposit accounts paid by IDIC. This condition implies that every year, some banks have poor performance, raising the concerns of the customers in spite of the guarantee provided by IDIC.  the situation. IDIC is expected to be a leading, trusted and recognized institution that can guarantee customer deposits and carry out bank resolutions to encourage and maintain financial system stability. IDIC is committed to show integrity, collaboration, accountability, respect and excellence. IDIC (2023) emphasizes that the function of this institution is to guarantee customer deposits and maintain the consistency of the banking system. IDIC is responsible for formulating, creating, and implementing a range of regulations pertaining to deposit insurance. Additionally, it aims to ensure the financial stability by implementing deposit insurance measures and devising solutions for banks facing default situations. IDIC also has some authorities that include (1) determining and collecting loan premiums and bank contributions, (2) managing IDIC assets and liabilities, (3) storing all data from banks, (4) performing reconciliation, verification and confirmation of data from banks, (5) creating the terms, procedures and conditions for payment of claims, (6) assigning other parties in charge, and (7) stipulating administrative sanctions (IDIC, 2023).
In 2016, the Law Number 9 was issued, where the task of IDIC was expanded to the prevention of crises through banking restructuring program. In 2020, the Law Number 2 was issued to deal with threats that endanger the national economy and financial system stability. As a member of the Financial System Stability Committee, IDIC is making the best effort to keep the national financial system stable amid the problems occurring from the COVID-19 pandemic (IDIC, 2023). The readiness to face global economic challenges by strengthening financial safety net was the most interesting topic at G20 in 2022. In general, financial safety net includes 3 main elements: a deposit insurance system, regulatory policies, and the central bank as lender of last resort ). The guarantee system strongly affect the customer trust and bankruns. In addition, if bank failure occurs, IDIC will be ready to return the deposit based on the predetermined criteria (Nizar & Mansur, 2023).
Moreover, knowledge is the most important asset in one's belief (Eling, 2011). Inadequate knowledge of the public about the role of IDIC leads to inadequate customer perceptions about the banking system which has been regarded full of uncertainties (Alamsyah et al., 2020). There are important aspects related to deposit insurance, namely non-holistic information, moral hazard, and riskbased pricing (Freixas & Rochet, 2006). Most of the customers find it hard to completely trust the information that is directly conveyed by the government (Nys et al., 2014). Television is an information medium that can generate public trust, yet people nowadays prefer listing to information shared on social media banks. Customers will be more likely to continue saving in the bank if they feel that the bank can be relied upon to keep and manage their funds safely. Customers tend to choose banks that they believe can keep their funds safe (Sumaedi et al., 2015).
Previous research examined customer knowledge on customer retention in the context of banking. There is a strong relationship between customer knowledge and bank customer retention ( Karim & Habiba, 2020) without paying attention to key supporters such as IDIC. IDIC is an independent institution from the government that will strengthen customer perceptions of banks. So far, there is no research that combines knowledge and trust in IDIC to bank customer retention, especially in Indonesia. Therefore, this study combines two factors with different theories based on customer perceptions of IDIC to measure bank customer retention.
The purpose of this study is to explore the relationship between customer knowledge and customer trust in IDIC on bank customer retention in Indonesia based on the concept of customer relationship and commitment-trust theory.
Knowledge and trust are applied in this study, due to their strong influence and high validity on bank customer retention (Kabue, 2021;Liu & Louvieris, 2006). The study consists of an introduction, a brief overview of the methods, an indepth discussion of the results, and a summary of the conclusions.

METHOD
A survey was conducted by distributing online questionnaires to bank customers in Indonesia. This study employed a cross-sectional design to investigate the bank customer retention. Questionnaires were distributed to random customers on social media. All questionnaire items were modified by ( (Vinzi et al. (2010), the data testing carried out does not require the data to be normally distributed. SmartPLS is also appropriate for analyzing more than one dependent variable and can directly analyze with indicators. The analysis model with SmartPLS can contain formative or reflective indicators. Its flexibility can handle complex models and constructs (Hair et al., 2010).

Customer knowledge and bank customer retention
The concept of customer relationship was developed by Kim et al. (2003) to explain the strategy of maintaining good relationships between companies and their customers through information received (knowledge). Huiming & Yi (2011) define knowledge as information that individuals know very well.
Knowledge has an important role in responding to each customer's needs, based on information obtained from the technology base (Kabue, 2021). In addition to attracting customers, the company's main goal is to retain its customers. Customers who understand the function and role of IDIC will feel safe and continue to save money at the bank. Alhawari    Table 5 shows that the majority of respondents (53.9%) understand the role and function of the IDIC, but 8.5% of respondents do not understand it. The dominant respondents (53.9%) agreed that they understand the performance of IDIC in protecting customer deposits well. However, 9.2% did not understand it well, and even 1.4% of respondents really did not understand how IDIC protects bank customers' deposits. The majority of respondents (53.2% and 43.3%) have a good understanding of the IDIC guarantee limit amount and claim procedures when banks default. However, 9.9% and 10% of respondents did not understand the concept of the IDIC guarantee limit amount and bank default claims, respectively. It can be seen in Table 6

Hypotheses testing
The validity test can be seen based on the convergent validity results through the factor loading value. Overall factor loading shows a good value with an average of 0.8 per item (Table 8), thus exceeding the recommended standard value of 0.60 (Loewenthal, 2004).
Validity can not only be seen from the results of convergent validity, but also seen based on the results of discriminant validity. The average variance extracted (AVE) value will be met if the AVE value of each construct is > 0.5 (Hair et al., 2010). Table 9 shows that the AVE value in each construct exceeds 0.5 (0.746, 0.658, and 0.629) with a composite reliability (CR) of 0.922, 0.852, and 0.871, thus exceeding the minimum recommended CR value of 0.70 (Vinzi et al., 2010). The overall Cronbach Alpha (CA) is also met because it exceeds the recommended value of 0.600 (Kuncoro, 2013). It is recognized that the CA of each variable is 0.886, 0.74, and 0.803. Therefore, each item and variable is declared valid and reliable.      Table 11 shows that the customer knowledge and customer trust variable has a positive and significant effect on bank customer retention. This can be seen based on the t statistic which is greater than the t table (3.065, 10.694 >1.96) and p value (0.002, 0.000 < 0.05). The hypothesis results prove that if customers increasingly believe in the role of IDIC and have good knowledge of IDIC, it will increase bank customer retention.

Discussion
The results reveal that customer knowledge and customer trust in IDIC have a positive and significant effect on bank customer retention.
The first hypothesis is accepted and supports the concept of customer relationship, where knowledge is explained as a strategy to maintain a good relationship between the company and the customer (Kim et al., 2003). Descriptive statistics reveal that almost half of the respondents are still unsure and unaware about the role, function, task, and performance of IDIC. Therefore, important information related to IDIC should be shared on social media to improve customer knowledge. People nowadays prefer listing to information JED | 546 shared on social media (Butzbach, 2014;Filipiak, 2013;Fungáčová et al., 2021;Suljić Nikolaj et al., 2022). Customer knowledge in IDIC serves as the basis for bank customers to achieve a satisfying experience. Information about the role and function of IDIC that is channeled well, can reduce the possibility of customers switching to other banks. The high level of customer knowledge on IDIC in protecting deposits at the bank can build a strong relationship between customers and banks. Thus, it will increase bank customer retention. Customers who are very familiar with the IDIC guarantee limit encourage customers to continue to save large amounts of money. It is very important that information about claim procedures if the bank defaults is well understood. This will reduce customer anxiety due to the large number The second hypothesis is accepted and supports the commitment-trust theory (Morgan & Hunt, 1994), where trust is considered the main key to maintaining good relationships with customers in the long term. Descriptive statistics show that the majority of respondents believe in bank performance because of IDIC. Thus, it will increase bank customer retention. Significant trust in the duties, functions, and authority of IDIC will make customers keep large amounts of money in the bank without any doubts. This study provides empirical evidence that customer trust in IDIC encourages bank customer retention (Alamsyah et al., 2020;Demirgüç-Kunt et al., 2015). Trust in IDIC provides a sense of security and protection to customers that their deposits will be protected in the event of bank failure. This can encourage customers to keep saving and entrust their savings to banks that are protected by IDIC. Customers who have trust in the banking system will generally be more likely to continue saving because they view the bank as a safe and trustworthy institution. If customers have high trust in IDIC, they tend to see the risk of bank failure as lower or well-managed. This can make customers feel more comfortable to saving in the bank. The results of the second hypothesis are in line with (Famiyeh et

CONCLUSION
The purpose of this study was to investigate the customer knowledge and customer trust in IDIC on bank customer retention. Customer trust in banks has declined since the financial crisis and many banks have been liquidated. The Indonesian government formed IDIC to overcome this and increase customer trust again. Nonetheless, the knowledge about the function of IDIC in several provinces in Indonesia is still very minimal (Alamsyah et al., 2020). Customer knowledge and customer trust are proven to have a positive and significant influence on bank customer retention. Therefore, it is important to increase knowledge and maintain trust in IDIC which will increase bank customer retention. If customers have great confidence in IDIC, then the risk of bank failure tends to be lower and well managed. Thus, customers feel more comfortable to save in the bank. In addition, knowledge about the role of IDIC that is channeled well reduces the possibility of customers switching to other banks.
The findings can be used as a reference for banks to determine the feasible strategy to improve customer trust and customer knowledge. IDIC need to conduct its duties and functions properly to keep the banking system stable. Improve customer knowledge and customer trust were important things to increase bank customer retention. This study offers a new concept with the integration of two theories, therefore it will be useful for future research. The findings are useful for addressing research gaps that have inconsistent results. In addition, this study also contributed to the G20 held in October 2022 regarding the improvement of the financial safety net where multilateral development banks are encouraged to strengthen its financing system to deal with the global economic challenges. In this context, the role of IDIC is significant in as the element of financial safety net.
In this survey study where questionnaires were distributed online, respondents might be less serious in filling out the questionnaires and they could possibly have looked up about IDIC elsewhere. The study applies two factors because there is a strong influence and high validity on bank customer retention (Kabue, 2021;Liu & Louvieris, 2006). Thus, the study experienced limitations on the factors that influence bank customer retention. Future researchers are encouraged to perform interview and include more respondents from other age groups. In addition, the suggestion for future research is to be able to use and develop this conceptual framework to the fullest.